Summary: A gift does not become tax-exempt merely because it is given on Diwali. Its tax treatment depends on its nature and value, the relationship between the giver and recipient, and the applicable statutory exceptions. Section 92(2)(m) of the Income-tax Act, 2025, corresponding to Section 56(2)(x) of the Income-tax Act, 1961, covers specified receipts without consideration or for inadequate consideration. Where aggregate monetary gifts or the aggregate fair market value of specified movable property received without consideration exceed Rs. 50,000, the entire relevant amount may be taxable. For specified movable property acquired for inadequate consideration, the difference becomes taxable when it exceeds Rs. 50,000. Immovable property is assessed using its stamp duty value, with a separate tolerance for inadequate consideration based on the higher of Rs. 50,000 or 10% of the consideration. Gifts from specified relatives, on the recipient’s own marriage, or under a will or by inheritance qualify for statutory exceptions. Employer gifts in kind, vouchers or tokens are subject to separate valuation rules, with nil valuation where the aggregate value during the tax year is below Rs. 15,000.
Gifts Covered by Section 92(2)(m)
As per Section 92(2)(m) of the Income-tax Act (ITA), 2025 (corresponding to Section 56(2)(x) of the Income-tax Act, 1961), gifts received without consideration, or for inadequate consideration, may be taxable in the hands of the recipient under the head “Income from Other Sources.” The provision applies not only to cash gifts but also to gifts of specified movable properties (such as such as jewellery, shares, paintings, etc) and immovable properties. The tax implications would be as follows:
Taxability Thresholds for Money and Property
| Nature of receipt | Condition for taxability | Amount taxable under “Income from other sources” for recipient |
|---|---|---|
| Money received without consideration | Aggregate monetary gifts during the year exceed Rs. 50,000 | Entire aggregate amount received |
| Specified movable property received without consideration | Aggregate fair market value (FMV) exceeds Rs. 50,000 | Entire aggregate FMV |
| Specified movable property acquired for inadequate consideration | Aggregate FMV exceeds the consideration paid by more than Rs. 50,000 | Entire difference between aggregate FMV and consideration paid |
| Immovable property received without consideration | Stamp duty value of the property exceeds Rs. 50,000 | Entire stamp duty value |
| Immovable property acquired for inadequate consideration | Stamp duty value exceeds the consideration paid by more than the higher of Rs. 50,000 or 10% of the consideration | Entire difference between stamp duty value and consideration paid |
Exemptions for Gifts from Relatives, Marriage and Inheritance
However, the law provides a significant exemption for gifts received from specified relatives, on the occasion of the recipient’s own marriage, under a will or by inheritance etc. For determining the exemption on gifts, specified relative would include a spouse, siblings, siblings of the spouse or either parent, lineal ascendants and descendants of the individual or spouse, and spouses of such aforementioned relatives.
Tax Treatment of Gifts from Employers
For gifts from employers, the Income-tax Rules, 2026 generally treat the value of a gift in kind, voucher or token as nil if its aggregate value for an employee during the tax year is below Rs. 15,000.
